Oil rises, gold holds, silver break out?

Oil prices remain elevated

Oil prices spiked higher on Ukraine developments yesterday, with Brent crude peaking for a short time, above USD 99.00 a barrel. Following the US and Europe sanctions announcement, oil rapidly gave back its intraday gains, finishing slightly lower than yesterday morning’s opening. Brent crude closed 0.60% lower at USD 96.30 a barrel and WTI closed at USD 91.60 a barrel.

In Asia, local buyers have emerged to buy the dip, another warning sign that physical traders feel that the lull may be temporary. Brent crude and WTI are 0.70% higher to USD 97.10 and USD 92.20 a barrel respectively. Lost from the front pages, an Iran nuclear deal could potentially emerge this week, which would add around 1.5 million bpd to international markets. That is probably tempering gains in oil for now even as OPEC+ members reiterate that they are pumping enough oil for global needs. An Iran deal failure, or a Ukraine escalation, will send prices back to recent highs.

Brent crude has resistance at USD 99.50 and 100.00 a barrel, with support at USD 95.50 and USD 90.00 a barrel. WTI has resistance at USD 95.00 a barrel and support at USD 90.00 a barrel. A full-scale invasion of the Ukraine will render those resistance levels a moot point and I believe Brent crude will spike to the USD 120 to USD 130 area.

Gold holds steady but watch for potential silver topside

Gold prices spiked to USD 1914.00 an ounce earlier in yesterday’s session on Ukrainian nerves. However, the US and Europe sanctions announcement sparked a relief rally in risk sentiment, pushing gold to a daily close 0.30% lower at USD 1898.50 an ounce.

Gold has support at USD 1880.00 an ounce, with resistance at USD 1920.00, USD 1960.00, and then USD 2000.00 an ounce. The relative strength indicator (RSI) remains very overbought, tempering gold gains for now. However, the topside remains the path of least resistance and gold prices will quickly resolve above USD 2000.00 if Russia’s actions in the Ukraine intensify and more Western sanctions follow.

Silver

Silver has been lost in the Ukraine noise but is now displaying some very construction longer-term price action. Silver appears to be in the process of breaking out of a symmetrical triangle formation dating back to May 2021. The base of the triangle is at USD 21.4000 an ounce, with the slope today at USD 24.2100.

Silver is trading at USD 24.2000 today and has been flirting with the resistance for the last couple of sessions. I would personally like to see silver close nearer 24.5000 by Friday to confirm, but a breakup signals a potentially quite quick rally targeting USD 31.5000 an ounce. Worth keeping an eye on.

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